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Edited version of your written advice
Authorisation Number: 1013035564214
Date of advice: 21 June 2016
Ruling
Subject: CGT - ownership interest in a leased property
Question
Are you considered to have an ownership interest in a property which is subject to a lease for the purposes of section 118-130 of the Income Tax Assessment Act 1997?
Answer
Yes.
This ruling applies for the following periods
Year ending 30 June 2016
Year ending 30 June 2017
The scheme commences on
1 July 2015
Relevant facts and circumstances
You are negotiating with Entity X for a lease of an apartment in a retirement village.
You have paid a deposit on the lease and are about to execute a Deed of Agreement for Lease, including a Deed of Lease.
You expect to occupy the property as your main residence during the 2016-17 financial year.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 118-115
Income Tax Assessment Act 1997 Section 118-130
Reasons for decision
Section 118-130 of the Income Tax Assessment Act 1997 (ITAA 1997) states you have an ownership interest in a dwelling if:
• for a dwelling that is not a flat or home unit - you have a legal or equitable interest in the land on which it is erected, or a licence or right to occupy it; or
• for a flat or home unit - you have
• a legal or equitable interest in a stratum unit in it, or
• a licence or right to occupy it, or
• a share in a company that owns a legal or equitable interest in the land on which the flat or home unit is erected and gives you a right to occupy it.
A dwelling is defined in section 118-115 of the ITAA 1997 as including a unit of accommodation that:
• is a building or is contained in a building, and
• consists wholly or mainly of residential accommodation.
You are entering into an agreement to lease the property in a retirement village. The property is considered to be a dwelling. The lease is a licence or right to occupy the property.
As such, you are considered to have an ownership interest in property for the purposes of section 118-30 of the ITAA 1997.
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